Uganda oil imports land, end Kenyan firms’ fuel transit business

Thursday July 04 2024

Uganda Energy Minister Ruth Nankabirwa waves the flag when the first oil shipment destined for her country docked at the port of Mombasa on July 3, 2024. Photo | Kevin Odit | NMG


The first oil shipment destined for Uganda docked at the port of Mombasa on Wednesday, marking an end of Kenyan oil market companies fuel transit business to the neighbouring country.

MT Navig8 Matines, sailing under the Liberian flag docked at the new Kipevu Oil Terminal 2 (KOT2) at 7.15 am (GMT +3) carrying about 60,000 metric tonnes of petrol with the second vessel, MT SINBAD with about 70,000 metric tonnes of diesel, scheduled to arrive in Mombasa on Wednesday night.

The first ship was welcomed with water cannon salute celebrations with Uganda Energy Minister Ruth Nankabirwa, Uganda National Oil Corporation (Unoc) board chairman Mathias Katamba and CEO Proscovia Nabbanja leading the country's delegation in receiving the consignment.


Mv Navig8 Martinez fuel tanker docks at the Kipevu Oil Terminal 2 at the port of Mombasa with Uganda's petrol consignment July 3, 2024. Photo | Kevin Odit | NMG

“This is a milestone after more than 12 months of negotiations between Kenya and Uganda. We can assure Ugandans of cheaper fuel in the future and quick supply since Unoc has demonstrated capacity in delivering petroleum products to Uganda,” said Dr Nankabirwa.

Unoc is the sole importer after the deal that eliminated Kenyan companies and promises consistent supply and moderate fuel prices.


"The fuel will get into the Kenyan pipeline infrastructure and later to Uganda via trucks," Unoc said.

The State oil agency signed deals with the Kenya Pipeline Company (KPC) in May, allowing Uganda to import oil through the port of Mombasa and store it with KPC. This followed protracted talks between Kenya and Uganda, including a court battle where private oil dealers that have supplied Uganda for decades protested Unoc’s sole importer status.

Read: Uganda locks out Kenyan firms in oil transport deal

“We expect the first drop to arrive in Uganda this week and with the investment in the oil transportation starting at Kipevu terminal 2, which can handle several vessels at a go,” said the Energy minister.

According to KPC, the fuel is expected to be picked up in either Eldoret or Kisumu for forward delivery in the next three days.

Ms Nabbanja, on the other hand, said the strategic direction by President Yoweri Museveni to make Unoc the sole importer of fuel would make the business competitive and lower costs for the final consumer.

“We have a solid supply partner and with the Sale and Purchase Agreement (SPA) signed with Uganda oil marketing companies will offer a reliable supply of fuel as other stakeholders in the supply chain benefit from the business,” said Ms Nabbanja.

Read: Uganda state oil firm signs fuel sales deals with 80 marketers

More fuel

Kenya's Petroleum Principal Secretary Mohamed Liban, who was present, said the agreement would significantly improve fuel handled to different East African regions from the current 40 percent of total fuel handled in Mombasa port.

“Currently, we handle 20 percent of petroleum products destined for Uganda, 10 percent to South Sudan and the same percentage to Rwanda. 

With the new KOT2 and such agreements, Kenya projects to increase transit fuel to more than that in the coming months,” said Mr Liban.


Kenya Ports Authority MD Captain William Ruto (left) with Uganda Energy Minister Ruth Nankabirwa (second left) during the reception of Uganda's first oil shipment at the new Kipevu Oil Terminal on July 3, 2024. Photo | Kevin Odit | NMG

Kenya Ports Authority (KPA) managing director Captain William Ruto said they plan to increase the throughput of fuel to Uganda. The new KOT2 and KPC storage facilities, he said, would be able to handle any size of the vessel and store a reliable supply of petroleum products.

“Our efficiency due to heavy investment in infrastructure is helping the country to attract more businesses and this is one of them,” said Capt Ruto.